Chinese Car Market

20 Pages 5026 Words

is encouraging consumers to spend money on cars, housing, telecommunications, tourism, cultural entertainment, sports and medical care. In order to improve the environment for the car buyer, a credit system is about to be founded and developed. It was felt that the credit system could substantially benefit the Chinese car market. Last year only 20% of the 720,000 cars sold in China were on credit, so a functioning credit system would likely boost sales. (tdctrade.com)
The Chinese government is also at present improving the infrastructure by building major networks of roads in China, which likely increases the demand for cars furthermore.

Economical
Even though the world economy has experienced a low growth the last year the Chinese economy has enjoyed an impressive growth. The GDP increased with 7.3 % in 2001 compared to the previous year. The sales of consumer goods soared with 10.1%, which was probably partly due to that, the per capita net income for urban residents increased by 8.5%. The Chinese car market is also subject to a very substantial growth. Until October this year 803,200 cars have been sold in the Chinese market which is an increase by 47% (www.autonews.com) compared to the same period in 2001 when 720,000 cars were sold for the whole year. In fact privately owned cars tripled in quantity between 2000 and 2001. (austrade.gov.au)
Since cars are products that are rather sensitive to fluctuations in the economy (sales are high when the economy is booming and low when in a recession), it could be an interesting market for foreign car manufacturers to target. Since the Chinese economy seems to be in a stage of rapid growth when the world economy is in a slowdown. Likely the Chinese economy will be growing even more rapidly when the world economy recovers, since China is opening their markets and now can benefit from the international trade.
Regarding the Chinese currency the renminbi, it is convertible for current ac...